Cashing in on the optimistic air surrounding Internet stocks, M-Web will issue additional shares to raise R400 million for the company`s expansion policies.
The company says it will issue shares by way of a renounceable rights offer of new ordinary shares to M-Web ordinary shareholders in order to raise R400 million before expenses.
M-Web`s intention to expand was announced in its interim results, despite its R142 million operating loss for the six months to September 1999. CEO Antonie Roux warned that the losses would continue until early 2001, as the company embarked on a drive to increase its dial-up subscriber base.
This has been partially achieved by its recent acquisition of both the NetActive and Casey subscriber bases.
The merger of AOL and Time Warner has created a renewed interest in Internet stocks, and analysts have suggested that M-Web might be trading on this with regard to the timing of its announcement.
However, Johan Augustyn, IT analyst with BOE Securities, remains cautious about risk levels involved for the investor looking to cash in on South African Internet companies.
"South African Internet companies will take longer to return to profitability than their international counterparts. We are looking at roughly three years before we see any real profit margins," says Augustyn.
"Until critical mass is achieved, access should remain the key focal point for SA Internet companies rather than content."
The last day to register for the shares is 28 January and terms of the offer will be published on 24 January.
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